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A Novel Idea to Solve The Debt Ceiling Crisis

by Darwin on May 1, 2011

I first started highlighting the circus that would ensue regarding the debt ceiling vote months ago where I laid out the likely political posturing and likely outcomes. What I didn’t lay out at that time was after we pass this next debt ceiling increase, what happens from there. Based on the past several debt ceiling increases (which ironically, Obama himself voted AGAINST under Bush), it looks like we’re going to have to undergo this charade on numerous occasions at an ever-increasing pace. The annoying drama and distraction that is playing out now will continue to play out forever! There’s no end! As a very simple analogy, Would You Lend to This Guy?

“We will continue to hold debt ceiling votes twice per year forever”

Here’s a recap of the debt ceiling increases from the prior decade (source wikipedia):

This is complete madness. First we increased the ceiling annually, no twice per year. What’s next, 3 times per year? We could always just make each increase even larger, right? Crazy. I have a novel idea.

My Novel Idea

I know, nobody’s talking about this seriously, not even Paul Ryan, who’s “draconian” budget simply brings us “closer” to a neutral deficit 10 years out, but my idea is unheard of in US politics even though millions of Americans live by it: Spend less than we make. Yes, I know, this is crazy. But how about actually DECREASING our national debt? This would be painful to be sure. But when you overpromise AND overdeliver, who pays? Nobody! We’re simply borrowing more and more each year to fulfill promises which are unfunded. This is complete madness. It’s unsustainable and it’s wrong. I think most Americans at least understand the problem, but most Americans also want a lot of stuff. They can’t have both. We need to either cut our spending (and hence, services, with perhaps tax hikes in there) or we continue down this path.

Who’s to Blame?

I know, everyone always blames Congress. The, Congress blames either rich people and corporations (liberal agenda) or social spending and entitlements (conservative agenda). Well, I blame Americans. Yeah, that’s right. You and I. We have NOT made the deficit an election issue. The recent emergence of the TeaParty is founded somewhat on reduction of the deficit, but primarily aimed at not raising taxes which is only part of the equation. Plus, many of the TeaParty leaders are Batshit Crazy! While I identify with some of the “decrease government spending” mantra, much of the other rhetoric is over the top.

The next election cycle, we need to focus less on social issues and who promises the most free stuff and more on who has the leadership and courage to make the necessary cuts to spending while balancing a continued favorable business environment to maintain hiring and consumer spending at reasonable levels. I’d like to see future candidates bucking the conventional trends and voting primarily based on fiscal prudence and not focusing on whether a cut impacts social agendas or not. ALL services must be cut and there can be no sacred cows. Tax reform is the subject of a whole other post, but on the spending side, it’s easy to propose, impossible to get the votes – unless American voters mandate it!

Multiple EU member countries can’t even roll over their debt. They’re being bailed out by Germany basically (and the US via IMF partially as well). Greece, Ireland, Spain, Portugal, they’re all a mess. And guess what’s happening? The Euro is still rallying against the dollar! What’s that saying about our state of affairs?

It’s clearly unsustainable; regardless of our size, there will be a day of reckoning in our lifetime.

The National Debt is directly related to an over-sized federal government.

If the federal government simply returned to providing for what it is specifically authorized to do in the Constitution (i.e., national defense, and a few other much smaller jobs) — leaving everything else up to the individual states, as our Founding Fathers intended — we’d be back “in the pink” in short order!